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Federal govt must not fuel provincialism

In 1997 general elections PML-N won a two third majority in parliament bagging 137 seats with PPP trailing with 18 seats. This unprecedented heavy mandate ended well before the end of the party’s tenure on 12 October 1999. Since then no party has won a simple majority in parliament and regional parties/independents have come to play an increasingly critical role in the formation of governments in the centre.

Over time the dominant party in the centre lost its ability to cobble a government in all the provinces and in the 2018 elections the party position in the four provinces was as follows: in Sindh the PPP formed a government without the need for coalition partners; in Punjab the PML-N won a few more seats than the Pakistan Tehreek-e-Insaf but the latter succeeded in cobbling a coalition government with the support of PML-Q, Khyber Pakhtunkhwa (KPK) voted overwhelmingly for the PTI, while Balochistan operates within its unique political paradigm.

This has generated a divisiveness between the centre and the federating units where a different party is in power with allegations of corruption and mismanagement levelled routinely against each other and charges of political victimization and unfair treatment thrown into this mix for good measure.

Ironically, conflict arose soon after the two most widely hailed across the political divide consensus documents were signed in 2010 – the tenth National Finance Commission (NFC) award and the eighteenth constitutional amendment. The PPP-led government’s (2008-13) implementation of these two documents was limited to including provincial surplus as a component of the budget (a practice that continues to this day though the budgeted target is becoming increasingly unrealistic) however it did not devolve the subjects (education, health, agriculture etc.) to provinces nor raised the tax to GDP ratio by one percent each year – an objective which had it been met would have generated enough revenue to meet the federal government’s requirements in spite of a rise in the provincial share of the divisible pool.

Nonetheless, a major achievement of the award was the decision by the Sindh government to pass the Sindh Revenue Board Bill (3 June 2010) assented by the then Governor on 20 June 2010 which has since emerged as a formidable source of provincial revenue as SRB began collecting sales tax on services (a provincial subject as per the constitution) which was earlier collected by the Federal Board of revenue (FBR) at a charge of 2 percent, which was then deposited in the divisible pool and distributed as per the NFC award.

The PML-N government (2013-18) constantly cribbed about the loss of federal revenue as a consequence of the NFC award (even though Ishaq Dar was reportedly engaged in the finalization of the NFC award document) but neither devolved the ministries nor increased the tax to GDP ratio as envisaged in the award. Disturbingly, it took the Punjab government two years more than the Sindh government to set up Punjab Revenue Authority — 1 July 2012 — followed a year later by KPK which established the KPK Revenue Authority effective 1 July 2013 with the mandate ‘to administer and collect taxes on services and infrastructure development.’ The Balochistan Revenue Bill was passed by its assembly on 25 June 2015 and was assented by the Governor on 3 July 2015.

Imran Khan’s PTI was not in parliament in 2010 and therefore not consulted on these two documents. However, what should be a source of serious concern for all stakeholders is the agreement reached with the International Monetary Fund by the government authorities on 12 May 2019 – Pakistan represented by Hafeez Sheikh, appointed on 24 April 2019 as the de facto Finance Minister (he also held the portfolio shortly after the 2010 NFC award and the eighteenth amendment were passed), and Governor State Bank of Pakistan Reza Baqir appointed on 6 May 2019 – an agreement that in the last sentence of only a one-page press release uploaded on the Fund’s website on 12 May 2019 stated: “to improve fiscal management the authorities will engage provincial governments on exploring options to rebalance current arrangements in the context of the forthcoming National Finance Commission.” Whether the two men were not aware of the tenth NFC award or the eighteenth amendment to the constitution of the country or they simply did not bother to read the one-page press release this must bring it home to all stakeholders that critical positions must be held by those with a history of engagement within the country. A multilateral with its own set of policy thrusts, which may or may not be suited to a particular country at a particular moment in time, is perhaps not a suitable breeding ground for senior national positions.

Khan’s last Finance Minister Shaukat Tarin was the architect of the NFC award and while his Prime Minister referred to the “unfair NFC award,” Tarin remained supportive highlighting the objectives that remain unmet to this day.

Water distribution is a thorny issue between upper and lower riparian provinces and in recent weeks has become a major irritant in relations between the Punjab, led by PML-N, and Sindh led by the PPPP – the two main national parties that have successfully cobbled a coalition in the centre. During a recent meeting of National Assembly Standing Committee on Water Resources hot words were exchanged between Sindh and Punjab members of Indus River System Authority with the former maintaining that water flows released from Taunsa barrage were not reaching Guddu in Sindh, implying thereby that there was misreporting at best and Punjab using the missing flows at worst — a charge denied by Punjab.

A high-powered team to investigate the matter was established by the Water Ministry with reports indicating that Sindh’s stance has been upheld.

Jam, Sindh Water Minister, stated that on 15 May “flows at Guddu upstream were recorded at 37,000 cusecs but it should have been 60,000 cusecs if the record for past flows for Taunsa downstream are to be believed.” Khalid Magsi, MNA and leader of the Balochistan Awami Party, stated that “while recalibration of flows is being done again at Guddu barrage an initial measurement shows a differential of 16000 cusecs of water between Guddu and Taunsa.”

Indus River System accord was signed in 1991 between the provinces and was a historic agreement however it is equally relevant to note that the accord lacked a clearly stated objective and its interpretation is biased in favour of a specific viewpoint, hence a review is necessary given the significant change in demographics, socioeconomic changes and of course climate change.

To conclude, it is becoming extremely critical for the federal government to take its federating units along with it on all matters – be they in terms of revenue (provincial surplus and/or rationalization of taxes) and expenditure (development projects) as well as on matters relating to water distribution. Bulldozing a political agenda rather than focusing on the needs of the public of the country has contributed to Pakistan’s current economic woes and it is high time that such practices are abandoned once and for all.

Anjum Ibrahim, "Federal govt must not fuel provincialism," Business recorder. 2022-05-30.
Keywords: Political sciences , Economics , State Bank , General elections , Political victimization , Political divide , Hafeez Sheikh , Imran Khan , Reza Baqir , Shaukat Tarin , Khalid Magsi , Pakistan , PTI , PMLN , PPP , KPK , NFC , GDB

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